wm 


k 


REP  0 ;B  "3'.  -.  v:  U \ 

\mw---'vr 

• • . ••  • ••••••*. 

. ••  ••  • »•  •••••• 


ON  THE  • • 


DEBT  AND  RESOURCES 


CITY  OF  BOSTON. 


BOSTON: 

JOHN  H.  EASTBURN,  CITY  PRINTER, 

No.  18  State  Street. 


1839, 


3 s £ * i 

■p>  G ^ 


In  Common  Council , March  7,  1839. 

This  Report  and  the  accompanying  Resolves  hav- 
ing been  read,  and  the  Resolves  passed  to  a second 
reading,  were,  on  motion  of  Mr.  E.  Williams,  ordered 
to  be  printed  for  the  use  of  the  Council. 

Attest,  Richard  G.  Wait,  Clerk , C.  C . 


71  • Or  O &-1r 


<y> 


O® 

c4 


REDUCTION 


OF  CITY  DEBT. 


In  City  Council , March  7,  1839. 

The  Committee  on  Finance  who  were  instructed 
“ to  consider  the  expediency  of  appropriating  the 
sum  of  $50,000  annually  for  the  reduction  of  the 
City  debt,”  have  attended  to  the  subject,  and  ask 
leave  to  Report : 


That  they  are  deeply  impressed  with  the  impor- 
tance of  making  effectual  provision  for  the  reduction 
and  ultimate  extinction  of  the  City  debt,  and  of  ma- 
king such  provision  of  a permanent  character,  and 
based  upon  a general  view  of  the  past  and  probable 
future  wants  and  resources  of  the  City.  In  the  first 
place,  they  would  remark  that  it  has  sometimes  hap- 
pened that  the  appropriations  for  the  current  expenses 
of  the  City  have  not  been  sufficiently  large,  so  that 
towards  the  close  of  the  year  it  has  been  necessary 
to  borrow  a considerable  sum  to  make  up  the  defi- 
ciency. This  was  the  case  the  very  last  year,  w?hen 
$28,000  were  ordered  to  be  borrowed  to  make  good 
the  deficit  that  it  was  known  would  occur  before  the 
first  day  of  May  next.  It  is  sufficiently  manifest  that 
this  is  a kind  of  debt  which  would  never  be  incurred 
by  an  individual,  or  a corporation,  that  had  the  power 
and  the  will  to  be  only  moderately  prudent.  It  should 
never  be  suffered  in  a City  like  Boston,  whose  means 
are  ample,  and  the  liberality  of  whose  inhabitants  is 
proverbial.  Whatever  expenses  are  of  a usual  kind, 
and  can  be  anticipated  at  the  beginning  of  the  financial 
year,  ought  to  be  fairly  and  fully  provided  for  in  the 
amount  taxed,  and  not  thrown  upon  the  shoulders  of 
posterity  to  pay,  while  we  enjoy  the  exclusive  benefit. 


4 J /REDUCTlOTsf  OF  CITY  DEBT. 

There*  is  another  cMssof  expenditures,  often  equal- 
ly necessary  ’wlihjtJipsk  which  are  customary,  and  that 
are  never  incurred  unless  from  a manifest  expediency, 
at  least,  which  a loan  is  a very  proper  mode  of  meet- 
ing in  part.  But  it  has  heretofore  been  the  general 
practice  of  the  City  Government  to  meet  such  ex- 
penditures wholly  by  loan,  instead  of  taxing  a portion 
of  them  on  the  generation  who  authorized  them,  and 
who  enjoy  a part  of  the  benefit  derived  from  them. 
The  expenses  alluded  to  are  those  which  arise  from 
the  erection  of  new  buildings,  as  the  Court  House, 
Market  House,  &c.,  or  from  great  improvements  in 
highways,  such  as  the  opening  of  Commercial,  Black- 
stone  and  Broad  Streets,  very  expensive  and  desira- 
ble improvements,  of  which  we  partake  of  the  advan- 
tages, and  ought  therefore  to  share  the  cost.  There 
seems  to  have  been  a vague  impression  of  an  indefi- 
nite and  growing  value  in  the  available  City  property, 
of  which  posterity  were  to  have  the  benefit,  and  that 
therefore  there  was  little  danger  of  loading  them  with 
too  heavy  a burden  of  taxation.  It  is  very  clear,  how- 
ever, that  the  value  of  the  disposable  City  property  is 
not  only  limited,  but  that  it  may  be  very  easily  esti- 
mated; and  it  would  seem  equally  manifest  that  jus- 
tice requires  that  it  should  not  be  mortgaged  by  any 
generation,  or  by  the  government  of  any  particular 
year,  beyond  its  actual  value  at  the  time.  Posterity 
will  have  its  own  burdens  to  provide  for,  and  it  is  but 
equitable  that  they  should  have  their  share  of  the  ri- 
sing value  of  the  public  property. 

These,  then,  seem  to  the  Committee  to  be  reason- 
able limitations  to  the  plan  of  defraying  expenses  by 
loan  on  the  general  credit  of  the  City ; first,  that  all 


REDUCTION  OF  CITY  DEBT. 


5 


current  expenses  should  be  paid  by  coincident  taxa- 
tion, and  secondly  that  the  public  property  should 
never  be  mortgaged  by  loan  beyond  its  actual  value 
at  the  time.  It  seems  also  to  the  Committee  that 
the  period  has  arrived  when  it  is  necessary  to  make  a 
careful  comparison  between  the  amount  of  the  debt, 
and  the  value  of  the  property  which  can  be  applied 
to  its  extinction — to  make  effectual  provision  for  its 
gradual  redemption — and  to  devise  the  proper  mode 
of  meeting  such  necessary  expenses  as  tend  to  the 
mutual  benefit  of  the  present  and  future  generations. 

It  is  so  very  probable  as  almost  to  amount  to  cer- 
tainty, that,  in  the  present  condition  of  the  City, 
many  expenditures  must  occur  which  it  would  be  un- 
reasonable to  provide  for  at  once,  and  equally  unreas- 
onable to  defer  entirely  to  a distant  period.  The  only 
way  to  be  just  is  one  which  is  very  easily  practica- 
ble, viz:  to  provide  by  taxation  for  a due  proportion 
of  such  sort  of  expense  in  each  year  from  the  time  it  is 
incurred,  till  the  loan  for  the  particular  purpose  shall 
be  finally  extinguished.  Besides  this,  it  seems  to  the 
Committee  in  the  highest  degree  desirable  that  the 
amount  annually  taxed  for  the  reduction  of  the  City 
debt,  should  be  increased,  and  should  bear  a certain 
proportion  to  the  whole  amount  of  the  debt.  What 
this  proportion  should  be  must  be  determined  by  re 
ference  to  the  character  of  the  work  which  has  beer 
performed  by  means  of  loans,  as  well  as  that  which 
will  hereafter  be  done,  should  further  loans  be  neces- 
sary. If  a new  street  be  made,  there  is  little  proba- 
bility that  it  will  ever  be  discontinued,  and  the  pay- 
ment of  the  cost  might  properly  be  distributed  over  a 
greater  number  of  years  than  if  a public  building  be 


6 


REDUCTION  OF  CITY  DEBT. 


erected,  which  there  is  much  reason  to  believe  may 
be  superseded  by  another  for  the  same  purpose  in  a 
short  period,  because  the  public  necessity  will  require 
a larger  and  more  commodious  edifice.  Entertaining 
these  general  views  the  Committee  are  prepared  to 
give  them  a more  definite  expression,  by  proposing 
to  the  City  Council  a certain  per  centage  for  each 
class  of  expenditure.  They  are  of  the  opinion  that  it 
is  expedient,  and  they  therefore  recommend  that  the 
sum  appropriated  each  year  towards  the  reduction  of 
the  City  debt,  be  not  less  than  three  per  centum  on 
the  amount  of  the  debt,  as  it  stands  in  the  Treasur- 
er’s books  at  the  time  of  passing  the  annual  appropri- 
tion  bill ; and  that  whenever  a loan  for  a specific 
purpose  shall  be  authorized,  if  the  object  be  not  of 
the  most  'permanent  kind,  i.  e.  if  it  be  for  building  a 
City  Hall,  a Court  House,  or  for  any  thing  which 
may  last  but  for  a short  term  of  years,  provision  shall 
be  made,  at  the  time  of  contracting  said  loan,  for  re- 
deeming it  at  the  rate  of  five  per  centum  per  annum 
till  it  shall  be  extinguished;  and  if  it  shall  be  found, 
on  the  completion  of  any  such  improvement,  that  it 
has  cost  more  than  w7as  anticipated,  the  sum  levied 
shall  be  raised  to  the  same  per  centage  on  the  final 
cost. 

Thus,  it  will  be  perceived,  the  Committee  are  in 
favor  of  an  annual  appropriation  which  in  thirty-three 
years  would  extinguish  the  debt,  (if  it  could  be  im- 
agined that  the  City  could  exist  and  grow  for  thirty- 
three  years  without  finding  it  necessary  to  borrow 
any  thing,)  and  of  a specific  appropriation  for  all  new 
loans  for  objects  of  a character  less  permanent  than 
those  which  are  most  so,  which  shall  extinguish  that 
particular  debt  in  twenty  years. 


REDUCTION  OF  CITY  DEBT. 


7 


It  may  be  thought  that  such  provisions  will  have  a 
tendency  to  retard  improvements,  by  increasing  the 
tax  necessary  to  complete  them  so  much  that  the 
City  Council  will  not  attempt  to  raise  it.  But  the 
Committee  have  no  fear  that  improvements  will  be 
delayed  longer  than  they  ought  to  be,  by  this  consid- 
eration. We  cannot,  to  be  sure,  always  go  on  at  the 
rapid  rate  we  sometimes  have  done,  while  the  debt 
was  increased  by  scores  of  thousands  of  dollars  per 
annum,  and  only  $ 15,000  were  appropriated  to  re- 
deem it ; and  is  it  right  that  we  should  ? Ought  we 
not  to  be  more  careful  in  spending  money  on  the 
credit  ©f  our  children  ? The  living  generation,  the 
actual  members  of  the  City  Government,  have  seen 
the  debt  rise  from  nothing  to  a million  and  a half  of 
dollars.  Can  this  go  on  ad  infinitum?  The  Com- 
mittee are  of  opinion  that  it  is  time  to  begin  to  raise, 
by  taxation,  a sufficient  sum  to  authorize  us  to  anti- 
cipate a real  reduction  in  the  amount  of  the  debt 
within  no  lengthened  period.  They  do  not  recom- 
mend any  particular  and  fixed  sum,  because  that 
might  become,  in  a few  years,  disproportionately 
small.  The  rate  of  three  per  centum  per  annum  on 
the  highest  amount  to  which  the  debt  shall  reach, 
seems  to  them  a fair  and  reasonable  rate ; and  it 
should  be  so  arranged  that  when  the  debt  is  dimin- 
ishing, this  appropriation  should  be  maintained  ; oth- 
erwise the  reduction  would  proceed  in  a constantly 
decreasing  series,  and  the  extinction  of  the  debt  be 
indefinitely  postponed.  At  this  rate,  it  cannot,  of 
course,  be  expected  that  the  debt  will  disappear  in 
precisely  thirty-three  years,  but  there  would  be  good 
reason  to  hope  that  it  would  not  increase  so  as  to  be- 


8 


REDUCTION  OF  CITY  DEBT. 


come  an  intolerable  burden,  and  that,  indeed,  at  some 
not  very  remote  period,  it  might  possibly  be  extin- 
guished. 

With  regard  to  the  danger  of  raising  the  tax  bill 
too  high,  by  adding  so  much  to  the  necessary  annual 
appropriations,  the  Committee  will  take  the  opportu- 
nity to  throw  out  a single  suggestion.  It  is  not 
so  much  the  amount,  as  the  inequality  of  taxation 
which  renders  it  vexatious  and  burdensotne  ; and  if  a 
way  could  by  devised  by  which  taxes  could  be  ren- 
dered less  unequal  than  they  now  are,  a great  portion 
of  all  the  complaining  which  is  now  heard  in  our 
streets  would  be  at  once  silenced.  Almost  any 
change  would  be  an  improvement,  as  our  system  of 
taxation  is  singularly  imperfect.  But  there  is  a plan, 
which  is  practised  in  another  City  with  excellent  re- 
sults, and  is  familiar  to  all  who  have  paid  even  a 
slight  attention  to  political  economy,  which  the  Com- 
mittee will  take  this  occasion  to  bring  to  the  atten- 
tion of  the  City  Council,  as  one  well  worthy  of  the 
most  careful  consideration.  It  is  levying  the  whole 
tax  on  real  estate.  However  alarming  this  may,  at 
first,  sound  to  those  who  hold  much  real  estate,  (and 
the  Committee  do  not  expect  them  to  hear  it,  for  the 
first  time,  with  entire  composure,)  yet  if  they  can  be 
induced  to  examine  into  its  probable,  its  certain  re- 
sults, the  Committee  persuade  themselves  they  will 
find  nothing  in  the  proposition  which  need  disturb 
their  equanimity  for  a moment.  It  is,  in  fact,  only  an 
indirect  way  of  taxing  that  personal  property  which 
is  used  in  the  community,  or  in  other  words,  it  is  a 
tax  on  consumption.  No  man  can  now  buy  a hat,  or 
a pair  of  gloves,  without  paying  some  minute  portion 


REDUCTION  OF  CITY  DEBT. 


9 


of  the  rent  and  taxes  of  the  person  to  whom  he  makes 
the  purchase ; and  if  the  whole  tax  were  levied  upon 
the  real  estate  of  the  City,  he  would,  in  every  pur- 
chase, pay  an  imperceptibly  greater  portion  of  the 
same  rent  and  tax.  At  present,  the  tax  on  real  es- 
tate, though  at  the  same  ratio  with  that  on  personal 
property,  amounts  to  nearly  two-thirds  of  the  whole 
assessment;  and  if  it  were  all  levied  on  it,  it  is  aston- 
ishing how  few  persons  would  find  the  foot  of  their 
tax  bill  materially  affected  by  it.  It  is  sometimes  said 
the  landlord  pays  the  tax  on  the  house,  or  the  store, 
and  sometimes  the  tenant,  but  in  fact  it  is  neither. 
The  tenant  hires  such  a house  and  such  a shop  as  he 
can  afford  from  his  business,  to  pay  for,  and  his  cus- 
tomers pay  his  rent  in  the  price  of  his  goods.  This 
is  one  of  the  principal  reasons,  if  not  the  most  im- 
portant one,  why  articles  are  generally  dearer  in  large 
than  in  small  towns.  Rents  and  taxes  are  higher, 
and  prices  must  be  proportionally  higher. 

It  would  seem,  then,  that  the  only  persons  who 
would  apparently  escape  a fair  share  of  taxation,  on 
this  scheme,  are  capitalists  possessing  a large  share 
of  personal  property,  who  accumulate  much  and  spend 
little ; a class  of  persons  happily  very  small  in  this 
country.  And  though  they  may  individually  pay  too 
little,  their  money  does  not  escape  ; for  such  is  the 
nature  of  our  institutions  and  habits  that  whether 
they  invest  it  in  stocks,  or  notes,  or  in  any  way  what- 
soever, it  falls  into  the  hands  of  business  men  who 
pay  interest  for  it,  and  convert  it  into  merchandise 
which  is  bought  and  sold,  and  thus  pays  a part 
of  somebody’s  tax  on  house  or  store. 

In  this  country,  however,  almost  every  one  lives 


10 


REDUCTION  OF  CITY  DEBT. 


up  to  his  means,  spends  as  much  as  he  can  afford, 
and  therefore  would  pay  as  much  tax  as  he  ought  to 
pay,  if  this  plan  were  adopted.  As  it  is,  he  may  es- 
cape a fair  tax,  as  his  property  may  not  be  visible. 
There  are  thousands  who  live  extravagantly,  for  one 
individual  who  lives  penuriously.  But  the  great  ad- 
vantage of  the  plan  is  that  it  would  prevent  all  guess- 
ing, as  there  would  be  no  great  difference  of  opinion 
among  practical  men  respecting  the  value  of  real  es- 
tate, and  by  thus  preventing  errors,  it  would  save  by 
far  the  greater  part  of  all  the  complaint  which  is  now 
so  abundant  about  taxation.  The  Committee  can 
testify  from  their  personal  experience,  as  they  doubt 
not  all  who  have  served  on  the  Board  of  Assessors 
can  do  likewise,  that  the  great  majority  of  complaints 
against  the  taxes  arises  from  those  on  personal  prop- 
erty, which  are  necessarily  assessed  without  positive 
knowledge,  and  must  be  the  result  of  chance  infor- 
mation. Few  men  complain  of  the  amount  of  their 
own  tax ; many  complain  because  they  think  their 
neighbor  ought  to  be  taxed  more. 

Another  advantage  of  this  mode  of  raising  the  taxes 
is  that,  being  levied  on  fixed  property,  it  will  prevent 
that  fertile  source  of  controversy,  the  removal  into 
the  country  of  those  who  possess  large  amounts  of 
personal  property.  If  they  have  any  real  estate,  it 
will  be  assessed  as  at  present ; and  if  they  make  any 
purchases,  whether  of  raiment,  food,  or  fuel,  they  pay 
a tax  which  though  levied  on  the  real,  is  paid  by  the 
personal  property  of  the  community,  and  which  will 
be  the  same,  whether  they  continue  in  the  City,  or 
remove  to  the  country.  And  indeed,  the  more  estab- 
lishments they  keep,  the  greater  the  expense  at  which 


REDUCTION  OF  CITY  DEBT. 


11 


they  live,  the  more  money  they  -will  spend  in  the 
City,  and  the  more  tax  they  will  pay. 

If  it  were  true  that  the  penurious  rich  man,  pos- 
sessing a large  amount  of  personal  property,  would 
escape  his  just  share  of  taxation  on  this  system,  there 
would  still  be  a compensation  for  this  circumstance 
in  the  attraction  it  would  present  to  his  mind.  It 
would  seem  to  him  a fine  thing  to  escape  this  ex- 
pense,— he  would  come  to  reside  among  so  judicious 
a people,  and  lend  his  money  to  the  merchant,  the 
jobber,  and  the  mechanic,  fertilize  their  fields  of  labor, 
and  enable  them  to  pay  a tax  on  the  very  property  he 
fancies  is  screened.  Thus  it  may  be  shown  that  this 
imagined  exemption  is  all  a delusion.  The  real  dif- 
ference between  the  penurious  and  the  liberal  man, 
would  be  that  the  one  would  pay  his  tax  willingly, 
openly,  and  knowingly,  the  other  would  pay  it  with- 
out knowing  it,  and  while  he  was  flattering  himself 
that  his  neighbor  was  paying  it  for  him. 

An  additional  benefit  of  this  mode  of  levying  the 
tax,  of  no  small  weight,  is  its  certainty.  All  taxes 
on  real  estate  being  a lien  on  the  estate,  cannot  fail 
to  be  ultimately  secure.  All  loss  of  taxes  would 
therefore  be  prevented  by  introducing  it. 

If,  then,  this  plan  were  adopted,  the  amount  of  as- 
sessment might  be  easily  increased,  to  the  moderate 
extent  which  would  be  necessary  to  accomplish  the 
object  mentioned  in  this  report,  without  exciting  any 
complaint,  and  all  the  appropriations  might  be  effec- 
tually provided  for.  In  the  present  state  of  the  law, 
the  difficulty  of  raising  the  amount  of  the  tax  will  be 
somewhat  greater ; but,  the  Committee  are  persuad- 
ed, not  greater  than  ought  to  be  met  and  overcome. 


12  REDUCTION  OF  CITY  DEBT. 

In  order  to  bring  the  whole  subject  before  the  City 
Council,  the  Committee  offer  the  following  resolves. 

For  the  Committee. 

SAM’L  A.  ELIOT. 

Resolved , That  it  is  expedient  that  all  current  ex- 
penses of  the  City  should  be  provided  for  by  taxation, 
or  the  income  of  the  City  property,  in  each  year. 

Resolved , That  it  is  expedient  that  a sum  not  less 
than  three  per  centum  on  the  amount  of  the  City 
debt  be  annually  appropriated  for  its  reduction  ; and 
whenever  a particular  loan  shall  be  necessary  for  an 
object  which  is  not  of  the  most  permanent  character, 
provision  shall  be  made  for  annually  raising  a sum 
equal  to  five  per  centum  on  the  amount  of  such  loan, 
till  the  same  shall  be  extinguished. 

Resolved , That  it  is  expedient  to  apply  to  the 
Legislature  for  leave  to  levy  the  whole  tax  of  the 
City  of  Boston  on  its  real  estate. 


